Through the miracle of modern
economics, Michigan
stands poised to surge into unprecedented prosperity. The engine that will
drive us to economic recovery is food stamps.

The explanation is that
food stamps have been discovered within the social services community to be an
economic stimulus. Quantification has even been concocted. The Michigan
Department of Human Services told the Lansing
State Journal that every $5 in food stamps generates $9.20 in economic
activity. That's a hefty enough return to kick us out of our doldrums.

Stay Engaged

Receive our weekly emails!

email address

And thus the shining path to a
new Golden Age is brightly lit before us: Give everybody food stamps.

The calculations become
astonishing. For simplicity, let's ignore those outbound moving vans
and round off Michigan's
population at 10 million. If everybody is given $50 a week in food stamps
(remember, the more generous we are, the richer we become), the formula assures
us of about $40 of added economic generation. That amounts to approximately a
$400 million bonanza in the statewide economy per week, or roughly $20 billion
per year. Would anybody turn down a $20 billion boost?

We can do even more.
Each of us could also be given $50 a week in restaurant stamps. The $20 billion
circulated through dining out has its own special kicker — the 6 percent sales
tax. Another $1.2 billion annually flows into state coffers just from one
program.

But where will we get the
money? We'll call it stimulus, and then Congress will appropriate it.

Of course, all this
comes out of the School
of Hokum Economics. It is
as misguided as the notion that raising the minimum wage puts "new money" into
the economy.

As with any entitlement
or stimulus program, from food stamps to film incentives, the money
that is given out first has to be taken away from someone else. The formula for
"economic activity" attributable to food stamp spending has to account for how
that money would have been spent had it remained in private hands. Since there
is no way of knowing, the formula becomes meaningless.

The money does not
create wealth. It merely moves around in a zero-sum exercise that rewards one
while depriving another. At the end of a shell game, you still have the same
number of shells. The gains of the winner are counterbalanced by the losses of
the loser.

Government-funded social
programs like food stamps need to stand on some merit other than hypothetical
gross economic benefits.

But governments are good
at shell-game economics. The current federal stimulus plan should be re-stated
as "so-called stimulus" or referred to as "stimulus" in snicker quotes. It is
not about boosting the economy but about playing a timing game — unveiling highly
promotable projects of photogenic merit supported by smiling candidates in
swing districts before the 2010 elections. Patronage rewards will follow, but
at the cost of economic stagnation elsewhere.

Today's national
"recovery" model emulates the Roosevelt follies
of the 1930s that prolonged the Great Depression to the end of that decade. Right
to the last the Depression's great embarrassment was the
proliferation of lean-on-your-shovel-ready jobs. Despite all the
government-funded make-work, the unemployment rate in 1939 was still 17.2
percent. The figure plunged only with the mass hiring of buck privates in the
early 1940s.

Meanwhile, billions of
dollars of new public debt in the 1930s dragged on the private economy. That
era's scandalous binge in the billions prepared for the way for today's
intoxication into the trillions.

If we want a prosperous
future, the first step is to abandon the zero-sum mindset and ditch the shell
game. Michigan
will not advance through fruitless formulas purporting a positive economic effect
from food stamps. The state is awash in senseless schemes rooted in gimmick economics.

Instead, the formula for
economic recovery is amazingly simple: Unshackle the productive.

#####

Daniel Hager is an adjunct
scholar with the Mackinac Center for Public Policy, a research and educational
institute headquartered in Midland,
Mich. Permission to reprint in
whole or in part is hereby granted, provided that the author and the Center are
properly cited.